Amazon-Backed M1 Exchange to Launch Facility for MSME Exporters at GIFT City
M1 Exchange, a platform dedicated to trade receivables and bill discounting for MSMEs, which is backed by Amazon, is set to establish a facility for MSME exporters at the Gujarat International Finance Tec-City (GIFT City). The platform has already obtained a license from the International Financial Services Centre Authority (IFSCA) of GIFT City. Along with three other platforms, M1 Exchange aims to tap into the $17 trillion potential of supply chain finance in global trade. The GIFT City facility will operate through a wholly-owned subsidiary.
Enabling Financing for SME Exports
Sundeep Mohindru, CEO of MYND Solutions Private Ltd, the promoter of M1 Exchange, stated that they will replicate their financing services for SMEs in India to facilitate exports by factoring invoices. Mohindru added that invoice discounting for Indian SMEs will be made possible using international banks or banks based in GIFT City. The discount rate for Indian SMEs will depend on the creditworthiness of the customer outside India rather than the financials of the exporting SME, resulting in cost savings of 3-4% for Indian SMEs.
Upcoming Facility and Investor Support
The sandbox testing phase is currently underway, and the facility is expected to go live for customers within three months. In addition to Amazon’s 10% stake in M1 Exchange, other investors include venture funds such as Sidbi Venture Capital Funds, BeeNext, Mayfield, and B2B platform Indiamart. Furthermore, Indian-licensed trade-financing platforms that utilize blockchain technology may also be explored for use in GIFT City ventures.
Hot Take: Boosting MSME Exports with Trade Financing
M1 Exchange, with the support of Amazon and other investors, is expanding its services to facilitate MSME exports. By establishing a facility at GIFT City, the platform aims to enable financing for MSME exporters by factoring invoices through international banks or banks based in GIFT City. This move is expected to result in cost savings for Indian SMEs and tap into the significant potential of supply chain finance in global trade. With the sandbox testing phase underway, the facility will be available to customers in three months, further bolstering India’s MSME sector.
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